Insurance......Again

[FranzVonHoffer]

I am from the Netherlands, and have family that still lives there. I can tell you this is not true. I do not know who you were speaking with, some things must have been lost in translation as you mentioned.

I had the same experience Holland.

A credit score is a measuring device on your interactions with lenders. It encourages you to engage with lending institutions and their products. The more you engage with them appropriately, you will be rewarded with a good credit score. Check on the credit score of someone who owns their own home, car and has no credit cards and you'll get about the same credit score as someone deep in credit card debt and has been chronically behind on bills. It's a big game. I don't think the Dutch like playing games much.

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[yomamma219]

[MENTION=20311]BobbyGT[/MENTION] Sorry I was exaggerating when I said "didn't even understand the concept" but where I was at credit seemed to be far less prevelant in everyday life. It may be relevant that I was in the North of the country.

Side note I would move back there in an instant if I could bring my friends and family and lifestyle in general, great place.

 

[NoVaGT]

If you don't give a sh*t about your credit or your payments you probably don't care about much else either. It shows a level of responsibility. Insurance companies are on the hook for tens of thousands if not hundreds of thousands of dollars depending on your policy, why wouldn't they use every factor available to determine your risk. Higher risk equals higher premiums and vise versa.

I don't necessarily agree with it but I see why they do it.

I don't agree with you. Credit ratings have nothing to do with how safe or un-safe a driver is. Having shitty credit doesn't mean you're more of a liability behind the wheel. Likewise having good credit doesn't mean you're a good driver.

Basically all it means is that wealthy people pay less for insurance.

Again, this is just the insurance industry's way of raising rates, of justifying. It's horse shit, and you're accepting it.

 

[JohnnyBoy]

I'm a licensed insurance agent for one of the major carriers. Just to hit a couple topics from reading over this thread:

1. Credit DOES play a factor in determining your rate but there are a lot of other factors as well. It is calculated into whats called an "Insurance Score." So credit, how long you've had insurance, continuous coverage without a lapse, driving record, limits of liability etc.

2. Insurance companies can't see what you're paying with another carrier but they can see your limits of liability and who you had an how long you had them etc.

3. Part of the rating is determined by the zip code you live in.

4. In general there has been a general rate increase across the board for all insurance companies due to claim frequency and severity. If a company pays more out for claims than premium they're taking in they have to have an increase for everyone even tho you didn't get into an accident. (I know it really sucks, mine went up 20%, try explaining this to irate customers cussing at you)

5. Also one of the biggest reasons for insurance premium increases are due to all the new technology in these cars now a days. Back then fender bender might be a few hundred dollars. Now a days with all the tech, cameras, sensors etc its gonna cost much much more to repair/replace vehicle.

I don't want to get too much in depth but there's a lot of shit that goes with it. But I'm with you guy...insurance is too fucking expensive.

 

[Shouldhavegotthegt]

I don't agree with you. Credit ratings have nothing to do with how safe or un-safe a driver is. Having shitty credit doesn't mean you're more of a liability behind the wheel. Likewise having good credit doesn't mean you're a good driver.

Basically all it means is that wealthy people pay less for insurance.

Again, this is just the insurance industry's way of raising rates, of justifying. It's horse shit, and you're accepting it.

You don't have to be wealthy to have good credit. You have to have some established lines of credit and just pay on time.

But I do sell insurance for a major carrier so I know how the system works. I also have to have home and auto insurance so I go through all the same stuff that everyone else does too. But if you want premier rates you have to fall into certain categories and having good credit is one.

 

[AEengnr]

Point 5 is a big one Johnny. Jalopnik had an article a few weeks back that highlighted the fact that simple headlight assemblies in new cars are upwards of $1k each. Ours are $1200+ each for OEM

 

[NoVaGT]

You don't have to be wealthy to have good credit. You have to have some established lines of credit and just pay on time.

But I do sell insurance for a major carrier so I know how the system works. I also have to have home and auto insurance so I go through all the same stuff that everyone else does too. But if you want premier rates you have to fall into certain categories and having good credit is one.

Please stop being pedantic. The fact of the matter is that poorer people WILL spend more on insurance than wealthier people regardless of how you want to present it. Poorer people wont do the loans, poorer people won't do the credit cards. Poorer people wont build the credit rating.

Even those that make sound personal financial decisions, if they don't build credit (say they do their life business mostly or completely in case, which is a recognized sound move), they pay more in insurance. And pity for anyone that gets into any sort of trouble that sees them late with any payments.

You're part of the problem, and you're in too deep to recognize or accept this as fact.

And the FACT of the matter is, that a credit rating means absolutely bupkiss as far as whether or not a driver is safe.

It's bullshit, EOS.

 

[marks]

Basically all it means is that wealthy people pay less for insurance.

.

Surely the more wealthy you are the less likely you are to need a loan. If you've never needed a loan then you'll probably have a poor credit rating. Likewise you can be wealthy and reckless or poor and responsible. Although I would have thought that someone with an M16 rifle as their profile pic would be considered an increased risk ! ;)

 

[NoVaGT]

I'm a licensed insurance agent for one of the major carriers.

But I do sell insurance for a major carrier so I know how the system works......

:lol::lol::lol:

 

[NoVaGT]

Surely the more wealthy you are the less likely you are to need a loan. If you've never needed a loan then you'll probably have a poor credit rating. Likewise you can be wealthy and reckless or poor and responsible. Although I would have thought that someone with an M16 rifle as their profile pic would be considered an increased risk ! ;)

Like an insurance company, we have to look at statistics and averages.

I'm 99.999999999% sure that if I looked at the average upper-income person's credit rating, it's far better than the average person in the lower brackets.

But whatever, I've found my cheaper insurance. I wish everyone else the best of luck.

 

[Ebm]

.

Point 5 is a big one Johnny. Jalopnik had an article a few weeks back that highlighted the fact that simple headlight assemblies in new cars are upwards of $1k each. Ours are $1200+ each for OEM

No freaking kidding guy. An oem taillight goes for around a bill(grand). A pair of taillights for the TDI I used to own was $50. With new technological innovations comes higher price tags. Just imagine how much the first production self-driving car is going to be.

 

[Dudie7]

The last quote I got from Farmers the rep told me I was jumping around carriers too much and that was hurting my rate. The level of BS these carriers spew is amazing.

The winning formula seems to be on top of a clean driving record:
Live in a quiet rural community
Keep your miles under 15k a year
Insure multiple vehicle, life home and health with the same carrier.

So now I just need to become a NYTBS author and work from home and I'm set.

You forgot "have a decent credit score".

 

[SStormtrooPer]

An insurance company only has exposure if there's an accident, and the way to gauge exposure in that regard is a person's driving record. A credit score is, in no way, shape or form, an indicator of how likely a person is to have an accident.

That is not accurate -- especially the credit score part.


The company's exposure is the risk being insured regardless of whether they experience a loss or not. The principal of insurance is the law of large numbers -- and we ALL pay for each other. It is the ONLY way insurance works.

That said, companies don't gauge exposure, they gauge risk. Risk is the POSSIBILITY they will suffer a loss, and individual driving record alone is not a valid indicator of that. Typically, premium is calculated is to use an actuarial model to determine the likelihood/severity of a loss based on any number of possible criteria. They start with a base rate, and each criteria will credit or debit that rate.
- Younger people are more likely to get in an accident than someone in their 50's
- males are more likely to have an accident than females
- you are more likely to get injured in a Ford Focus than a Subaru Outback
- you are more likely to get in an accident if you drive 20k mile a year vs. 10k., or drive a Mustang vs. a Kia Sedona.
- you are more likely to have an accident/theft in an urban area than rural, or in proximity of Detroit vs. Seattle
- you are more likely to have a Honda Accord stolen than a Ford Taurus.
- it will cost more to repair a Porsche than a Honda.
- you are more likely to have a loss if you can't manage your finances

And the list goes on. There are endless criteria that increase or decrease a company's exposure, and you pay for your statistical risk based on the rating characteristics they consider important. After all of those criteria are input, you get a final quote.

So, credit score... Credit score addresses moral and morale hazards. Moral hazard is the risk that an insured would intentionally cause a loss(i.e. fake a theft, burn the car up, intentionally crash it). Morale hazard stems from irresponsibility/bad decisions. Most persons that are irresponsible with their finances tend to be irresponsible in other aspects of their lives, so it can absolutely be argued that an individual with poor credit is more likely to be involved in an accident. There is also an inherent risk that is a result of the insured not being able to afford to properly maintain their vehicle(losses resulting from bad brakes, ball joints, severe issues with suspension or structure). Folks who find themselves in a "financial pit" through their own fault or not, are statistically higher risk than someone with good credit. I know its shitty, but that is the reality.



Two things suck right now for the folks in this thread --
1.) new cars total out easier, causing rates to go up, and
2.) dipshits just can't stop crashing Mustangs into people/property -- these idiots are why we can't have nice things, and every time I see some moron driving ANY high performance car on the edge of control, I want to smack the shit out of them.

 

[FranzVonHoffer]

That is not accurate -- especially the credit score part.


The company's exposure is the risk being insured regardless of whether they experience a loss or not. The principal of insurance is the law of large numbers -- and we ALL pay for each other. It is the ONLY way insurance works.

That said, companies don't gauge exposure, they gauge risk. Risk is the POSSIBILITY they will suffer a loss, and individual driving record alone is not a valid indicator of that. Typically, premium is calculated is to use an actuarial model to determine the likelihood/severity of a loss based on any number of possible criteria. They start with a base rate, and each criteria will credit or debit that rate.
- Younger people are more likely to get in an accident than someone in their 50's
- males are more likely to have an accident than females
- you are more likely to get injured in a Ford Focus than a Subaru Outback
- you are more likely to get in an accident if you drive 20k mile a year vs. 10k., or drive a Mustang vs. a Kia Sedona.
- you are more likely to have an accident/theft in an urban area than rural, or in proximity of Detroit vs. Seattle
- you are more likely to have a Honda Accord stolen than a Ford Taurus.
- it will cost more to repair a Porsche than a Honda.
- you are more likely to have a loss if you can't manage your finances

And the list goes on. There are endless criteria that increase or decrease a company's exposure, and you pay for your statistical risk based on the rating characteristics they consider important. After all of those criteria are input, you get a final quote.

So, credit score... Credit score addresses moral and morale hazards. Moral hazard is the risk that an insured would intentionally cause a loss(i.e. fake a theft, burn the car up, intentionally crash it). Morale hazard stems from irresponsibility/bad decisions. Most persons that are irresponsible with their finances tend to be irresponsible in other aspects of their lives, so it can absolutely be argued that an individual with poor credit is more likely to be involved in an accident. There is also an inherent risk that is a result of the insured not being able to afford to properly maintain their vehicle(losses resulting from bad brakes, ball joints, severe issues with suspension or structure). Folks who find themselves in a "financial pit" through their own fault or not, are statistically higher risk than someone with good credit. I know its shitty, but that is the reality.



Two things suck right now for the folks in this thread --
1.) new cars total out easier, causing rates to go up, and
2.) dipshits just can't stop crashing Mustangs into people/property -- these idiots are why we can't have nice things, and every time I see some moron driving ANY high performance car on the edge of control, I want to smack the shit out of them.

I really liked your write up. It does convince me better than most other arguments as to why a credit score is relevant to auto insurance. But I still think the credit score is a game though.

 

[GT Pony]

Surely the more wealthy you are the less likely you are to need a loan. If you've never needed a loan then you'll probably have a poor credit rating.

So I'm wondering if millionaires who never need a loan for anything have bad credit scores, and therefore get screwed on anything based on a credit score. The whole "credit score" BS seems to be misused at times.

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